How to avoid becoming a dinosaur

While writing this column the air was punctuated by the noise of people in green, yellow, red and blue T-shirts screaming with joy in a park outside the window.

Staff from one of the most successful technology companies in the world, Google, were having a regular day-long staff bonding and good fun session which went well into the afternoon.

For many, the day ended with drinks on the top storey balcony of the Google office as the sun went down over Darling Harbour.

It is a small window into the work culture at a company that has swept the world and in the process caused enormous disruption to many industries including newspapers, advertising, pay TV, free-to-air television and mobile telephony.

However, the world of technology is littered with companies that failed to make changes to their business models.

Japan provides many examples of this, including Sony, Sharp and Panasonic.

Other countries have their fair share of companies that lost the confidence of consumers or are in the process of doing so. BlackBerry, which came from Canada, and Nokia, which started in the toilet paper industry in Finland, are also struggling to survive.

A US company that is currently very challenged is Dell. It used to tower over the personal computer market but it has crashed in the face of the Apple iPad.

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In Japan, Sony is a particularly sad story because it once had the most innovative personal technology product in the world, the Walkman.

Sony and Panasonic were downgraded by credit ratings agency FitchRatings this past week.

Google could well be a survivor. Its happy and collegiate culture is matched with rewards for innovation.

Australian fund managers, custodians, lawyers and immigration agents are gearing up for a flood of money from wealthy Chinese wanting to take advantage of Australia’s latest business migration visa program.

As of this weekend, any foreigner making a complying $5 million investment in Australia assets can be issued with a visa to work, study or travel to and from Australia over a period of four years. One of the huge attractions for potential investors is that the visa includes the applicant’s immediate family members.

Investment options include Commonwealth, state and territory government bonds, Australian Securities and Investments Commission regulated managed funds and direct investment in proprietary Australian companies.

The NSW government has endorsed the program and will offer state sponsorship provided 30 per cent of the $5 million in complying assets are in invested in the state’s Waratah Bonds.

Deloitte, which is partnering with a fund manager targeting investors, expects that about 700 people a year will be issued with the visas.

It is clear from talking to those involved in promoting complying investment products that the estimated full-year quota will be filled very quickly.

Alan Lee, who is chief executive of Australian Capital Investment Management, says the Significant Investor visa program in Australia is much more flexible than those offered by other countries such as the United States.

Wealthy foreigners who have invested in the US in order to get a “green card" must also agree to be part of the US global taxation reporting system. Chinese business people do not like that.

The Australian visas have come under attack because there is no English test, no business skills requirement, no age limit and no interview with government representatives. A police certificate must be obtained.

The visa holder must spend at least 40 days a year in Australia. Also, investors can extend their four-year provisional visa by two years, with a maximum of two extensions.

Lee, who conducted a roadshow with JBWere at the offices of Baker & McKenzie in Shanghai this month, says there will be strong demand from Chinese investors based on conversations with potential investors in China.

Lee’s Australia Capital Investment Fund will share the profits earned by JBWere with investors, but Lee would not say how the profits would be split. He thinks the fund will have about 200 to 300 clients or $1 billion to $1.5 billion.

Another fund manager with a complying fund is Moelis & Co, which has launched the Moelis Australia Property Visa Fund. It is chaired by Australian property legend Richard Colless.

It is not suprising that fund managers are attracted to the visa program. Fund flows in Australia are stagnant outside of the money that is compulsorily invested through superannuation.

Another angle for Australian financial services companies is custodian services. Andrew Cannane, who spent three years establishing an office in Singapore for the Trust Company, says his company has received many inquiries from fund managers in Asia wanting to establish funds that comply with the visa program.

Singapore has identical legislation to the one introduced in Australia by Immigration Minister Chris Bowen.

The 600 stockbrokers who are not employed by Australian Securities Exchange member firms received some shocking news on Friday.

The word seeped out of federal Treasury that they will not be part of the carve-out in relation to conflicted commissions.

This outcome is a huge success for the Stockbrokers Association of Australia, which has been lobbying Financial Services Minister
Bill Shorten
extremely hard in recent months.

They have convinced Shorten to exclude those brokers who are not part of the established old world structures on the grounds that they are not covered by the market integrity rules of the ASX.

The brokers who operate outside of the member firms are mainly in small businesses offering financial planning. They are part of the regulated system because they have Australian Financial Services Licences.

They are represented by the Australasian Securities Dealers Association, which claims that it was prepared to introduce separate market integrity rules for its members.

Jamie Coote, who chairs ASDA, says that the failure of the minister to include his members in the carve-out on conflicted commissions is a short sighted move that will have no practical outcome.

The federal opposition has supported the position of ASDA. The most vocal supporter has been
Mathias Cormann
, who says he will make changes to the law if elected.

That means we will have a situation where new rules that come into force from July 1 next year will be repealed after the election if the opposition wins the election.

Coote says that the changes will cost a host of small businesses about $40 million in additional costs and force about 600 of the country’s 4000 stockbrokers to become part of member firms. The 600 are known as indirect market participants.

The members of ASDA include boutique brokers such as DJA Capital, Canaccord and BlackSwan Equities. It is believed that many online brokers supported the idea of a carve-out because they generate significant revenue from ASDA members.

The minister is likely to publish his ruling in relation to conflicted commissions next week.

Coote says boutique brokers employ more than 9000 advisers that perform the same role as ASX member employees and their 2.5 million clients will be disadvantaged.